The Budget has withdrawn tax exemptions given to lawyers and proposed a 14% tax on the services of a senior advocate to an advocate or partnership firm, and a person represented on an arbitral tribunal to an arbitral tribunal. This service tax would be levied under forward charge.

The proposal, intended to widen the tax base, met with criticism from lawyers who said that this goes against the move to allow foreign law firms to practice in India and can be challenged. "This sort of taxation will discourage the PM's dream to make India an arbitration hub in line with Singapore and London," said Lalit Bhasin, president of the Society of Indian Law Firms.

The government also plans to levy a 14% service tax on spectrum trading deals that will be available as input credit, providing much-needed clarity on such transactions. The tax base has been widened by doing away with exemptions to monorail or metro construction works, transportation of passengers by air conditioned stage carriage and by ropeway.

Finance minister Arun Jaitley has proposed a 0.5% Krishi Kalyan cess on all taxable services from June 1 to finance agricultural initiatives, thereby taking the total service tax rate to 15%. He had last year raised service tax rates from 12.36% (including the education cess) to 14%, which was later bolstered by a 0.5% Swachh Bharat cess. With exemptions going away, tax rates increasing and free flow of credits being introduced, the budget has taken steps towards the goods and services tax ( GST).

New exemptions have been given to construction of affordable housing up to 60 square metres, annuities under the National Pension Scheme, skill and vocational training, services offered by the EPFO, Insurance Regulatory and Development Authority of India and Securities and Exchange Board of India and construction by the government.

While Indian shipping lines will be eligible for input services and capital goods credit, credit of input services is being allowed on transport of passengers by rail and on transport of goods by vessels and containers. Interest rates on delayed payment of duty across all indirect taxes have been proposed to be made uniform at 15%, except in the case of service tax collected but not deposited with the government